How organisations can prepare for the practical implications of Gender Pay Gap reporting

Head of Employment Law, Deirdre Malone, explains some of the practical aspects of the Gender Pay Gap Information Act as organisations across Ireland prepare to publish their reports.

In brief:

• Widening of employee definition brings potential challenges
• Data must be collected sensitively, and employers must explain why they are seeking it
• Anomalies can be created by maternity and other types of leave and employers may need to take steps to address these in their reports

Among the key questions for many employers when it comes to Gender Pay Gap reporting will be who to include.

DM: All employees must be included, but this is not as straightforward as it appears. The definition of an employee in Irish employment law is well understood, but for the purpose of Gender Pay Gap reporting, the statutory definition is taken from the Employment Equality Acts and includes individual contractors who are engaged personally to provide services. This has the potential to make things very complicated for employers.

In most cases, employers have gone to some lengths to put in place arrangements to ensure that these individuals are not deemed to be employees. They do not have HR records for them, and they do not know how much the contractors are paying themselves for their work for the organisation, nor have they any idea of their leave and bonus arrangements and so on. Including this cohort of workers in the Gender Pay Gap report will place many employers in a very difficult position. The Guidance Note that accompanies the Act also advises employers to consult Workplace Relations Commission (WRC) case law for guidance, but this is quite unhelpful in my opinion.

Another potentially difficult question for employers is how to report non-binary and transgender employees.

DM: There is no definition of male or female in the Act. It is up to individual employees to self-identify their gender. It is important for employers to understand that, as HR records may not be in accordance with individuals’ self-identification. Very simply, everyone who identifies as female must be included as female in the report and the same applies for males.

Where there are non-binary individuals who do not identify as either gender in the workforce, they are not included in the Gender Pay Gap calculations but should be included for the purpose of headcount.

Employers must ensure that data collection in relation to gender identity is carried out as sensitively as possible. Those collecting the data must never rely on second-hand information or hearsay. They must ensure they are obtaining it either directly from the individual or from a trustworthy and reliable source. However, no one should be singled out and asked about their gender. It’s also important that employers engage with all employees about why they are seeking this data.

This further highlights the problems presented by the inclusion of contractors. HR departments will typically have no relationship with contractors and no real means of collecting this data. This data gap may lead to some employers being forced to exclude contractors from their gender pay gap report. A practical and common-sense approach is required.

How should a large group company with numerous legal entities report?

DM: Many large organisations will wish to produce a single Gender Pay Gap report for their Irish operations. However, they need to be mindful of the fact that each legal entity in the group which employs more than 250 people has its own statutory reporting obligations. There is nothing to prevent the organisation from producing a consolidated report as long as each of the legal entities also reports its individual statutory requirements within the consolidated report.

There will also be cases where large organisations have entities which are below the reporting threshold. In our experience with clients, they will wish to report on those entities in any case – either within a consolidated report or separately. They will do this in order to present the fullest possible picture of gender representation across its business and in the interests of transparency. Where they choose not to report on smaller entities, employers will need to communicate the reasons behind that decision to ensure that they are not open to accusations of a lack of transparency.

How do organisations manage various types of leave (sick leave, parental leave, maternity leave, study leave) when calculating ordinary pay?

DM: Quite simply, if the leave is paid, it’s included in the report. That is the case regardless of the type of leave. All pay received by every employee in the 12-month period up to the snapshot date must be included in the calculation.

This can give rise to anomalies in relation the maternity leave, for example. Where maternity leave is paid, an employer may pay an amount to top-up statutory maternity benefit, but only the portion paid by the employer is included in the calculation thereby artificially depressing the hourly pay rate of the employee in question. Where employees exercise an entitlement to additional unpaid maternity leave this can further skew the figures. This will have to be looked at as it will be important to explain the anomalies for the circumstances arising for various cohorts of employees.